Scentre Group has acquired a 50% interest in Garden City Booragoon shopping centre, Perth for A$570 million, inclusive of long-term property management, brand and development rights.
Booragoon was 100% owned by AMP Capital Diversified Property Fund, who will now become Scentre Group’s 50% joint venture partner.
Just 15 minutes south of Perth’s CBD, Garden City Shopping Centre is located in the suburb of Booragoon. Garden City was ranked most productive shopping centre for speciality turnover per square metre in Western Australia and ranked fourth nationally in the 2018 Shopping Centre News Big Guns report. The 72,843 square metre centre features six majors, eight mini majors and more than 160 specialty stores.
“We are excited to expand our operating business by adding the rebranded Westfield Booragoon to our leading Living Centre portfolio, said Peter Allen, Scentre Group CEO.
“Opportunities to purchase the best assets like Booragoon are rare. This acquisition follows the transactions we executed earlier in the year which released $2.1 billion of capital allowing us to pursue strategic and long-term value creating opportunities such as this one today,” he added.
Scentre Group will immediately commence pre-development work for a new development scheme in order to create long-term value for the co-owners.
The acquisition price represents a stabilised economic yield of approximately 5.5%. Booragoon’s current income has been impacted by preparations for the previous redevelopment plans. The current passing yield is approximately 4.7% with the immediate focus on improving income back to its full potential.
The transaction is expected to be marginally accretive to Scentre Group’s earnings from 2020 and will increase gearing to 31.7% (pro forma 30 June 2019 and before the buyback of SCG securities).
Scentre Group reconfirms its forecast Funds from Operations (FFO) growth per security, for the full year 2019, of 0.7% and distribution of 22.60c per security.